(215 ILCS 130/Art. 2 heading)
(215 ILCS 130/2001) (from Ch. 73, par. 1502-1)
Sec. 2001.
Certificate of authority; exception for corporate employee
programs; applications; material modification of operation.
(a) No organization shall establish or operate a limited health service
organization in this State without obtaining and maintaining a certificate
of authority under this Act. No person other than an organization may
lawfully establish or operate a limited health service organization in this
State. This Act shall not apply to the establishment and operation of a
limited health service organization exclusively providing or arranging for
limited health services to employees of a corporate affiliate of such
limited health service organization. This exclusion shall be available
only to those limited health service organizations which require employee
contributions which equal less than 50% of the total cost of the limited
health care plan, with the remainder of the cost being paid by the
corporate affiliate which is the employer of the participants in the plan.
(b) Any organization may apply to the Director for and obtain a
certificate of authority to establish and operate a limited health service
organization in compliance with this Act. A foreign corporation may
qualify under this Act, subject to its obtaining and maintaining
authorization to do business in this State as a foreign corporation.
(c) Each application for certificate of authority shall be filed in
triplicate and verified by an officer or authorized representative
of the applicant, shall be in a form prescribed by the Director, and shall
set forth, without limiting what may be required by the Director, the following:
(Source: P.A. 86-600.)
(215 ILCS 130/2002) (from Ch. 73, par. 1502-2)
Sec. 2002.
Issuance of certificate of authority.
(a) Issuance of a certificate of authority shall be granted if the
following conditions are met:
(b) No certificate of authority shall be issued if the initial minimum net
worth of the applicant is less than $100,000. The initial net worth shall
be provided in cash and securities in combination and form acceptable to the
Director.
(Source: P.A. 86-600.)
(215 ILCS 130/2003) (from Ch. 73, par. 1502-3)
Sec. 2003. Powers of limited health service organizations. The powers of a limited health service organization include, but are not
limited to the following:
(Source: P.A. 97-813, eff. 7-13-12.)
(215 ILCS 130/2004) (from Ch. 73, par. 1502-4)
Sec. 2004.
Required minimum net worth; impairment.
(a) A limited health service organization issued a certificate of
authority shall have and at all times maintain net worth of not less than
the greater of:
(b) A limited health service organization that has annual uncovered
expenses in excess of $50,000, as reported on the most recent annual
financial statement filed with the Director, shall maintain additional net
worth equal to 25% of such uncovered expenses in excess of $50,000 in
addition to the net worth required by subsection (a), subject to the maximum
net worth set forth in item (2) of subsection (a).
(c) A limited health service organization that has been approved by
the Director to offer a POS contract shall have and at all times maintain
net worth of not less than the greater of:
(d) A deficiency in meeting amounts required in subsection (a), (b), or (c)
shall require (1) filing with the Director a plan of correction of the
deficiency, acceptable to the Director and (2) correction of the deficiency
within a reasonable time, not to exceed 60 days unless an extension of
time, not to exceed 60 additional days, is granted by the Director. Such a
deficiency will be deemed an impairment, and failure to correct the
deficiency in the prescribed time shall be grounds for suspension or
revocation pursuant to subsection (h) of Section 4005 of this Act.
(e) Unless allowed by the Director, no limited health service
organization, officer, director, trustee, producer or employee of such
organization may renew, issue, or deliver, or cause to be renewed, issued or
delivered, any evidence of coverage in this State, for which a premium is
charged or collected, when the organization writing such coverage is
insolvent or impaired, and the fact of such insolvency or impairment is
known to the organization, officer, director, producer or employee of such
organization. An organization is impaired when a deficiency exists in
meeting the amounts required in subsection (a), (b), or (c) of this Section.
However, the existence of an impairment does not prevent the issuance or
renewal of any evidence of coverage when the enrollee exercises an option
granted under the plan to obtain new, renewed or converted coverage.
Any organization, officer, director, producer or employee of such
organization violating this subsection shall be guilty of a Class A
misdemeanor.
(Source: P.A. 87-1079; 88-667, eff. 9-16-94.)
(215 ILCS 130/2005) (from Ch. 73, par. 1502-5)
Sec. 2005.
Claims liabilities.
(a) Every limited health service organization shall, at all times, maintain
liabilities in an amount estimated in the aggregate to provide for the
payment of all claims incurred and any due and unpaid provider capitation,
whether reported or unreported, which are unpaid and for which such
organization is or may be liable, and to provide for the expense of
adjustment or settlement of such claims. Such liabilities shall be
computed in accordance with regulations promulgated by the Director upon
reasonable consideration of the ascertained experience and character of
such business for the purpose of adequately protecting enrollees and
securing the solvency of such organizations.
(b) Whenever the claim and claim expense experience of any such organization
shows the liabilities calculated in accordance with such regulations to be
inadequate, the Director may require such organization to maintain additional liabilities.
(Source: P.A. 86-600.)
(215 ILCS 130/2006) (from Ch. 73, par. 1502-6)
Sec. 2006.
Statutory deposits.
(a) An organization subject to the provisions of this Act
shall make and
maintain with the Director, for the protection of enrollees of the
organization, a deposit of securities that are in the form authorized under
Section 2-6 of the Health Maintenance Organization Act having a fair market
value equal to the minimum net worth required under subsection (a) of Section
2004. The amount on deposit shall remain as an admitted asset of the
organization in the determination of its net worth. The Director may release
the required deposit of securities required by this Section
upon receipt of
an order of a court having proper jurisdiction or
upon: (i)
certification by the organization that it has no outstanding
enrollee creditors, enrollees, certificate holders, or enrollee obligations
in effect and no plans to engage in the
business of insurance as a limited health service organization; (ii) receipt of
a lawful resolution of the
organization's governing body effecting the surrender of
its certificate of authority, articles of incorporation, or other
organizational documents to their issuing governmental officer for voluntary or
administrative dissolution; and (iii) receipt of the name and
forwarding address for each of the final officers and directors of the
organization,
together with a plan of dissolution approved by the Director.
(b) An LHSO that offers a POS contract shall, in addition to the
deposit required by subsection (a), deposit and maintain with the Director
cash or securities that are authorized investments under Section 1003
having a fair market value equal to the greater of:
(c) The combined deposit amount required in subsections (a) and (b) shall
not exceed $200,000.
(Source: P.A. 92-75, eff. 7-12-01.)
(215 ILCS 130/2007)
Sec. 2007. (Repealed).
(Source: P.A. 91-549, eff. 8-14-99. Repealed by P.A. 97-486, eff. 1-1-12.)
(215 ILCS 130/2008) (from Ch. 73, par. 1502-8)
Sec. 2008.
Provider contracts.
(a) All contracts with providers or with
entities which subcontract for the provision of limited health services to
enrollees on a prepayment or other basis and any contract with any
subcontractor thereof shall contain the following hold-harmless clause:
"The provider agrees that in no event including, but not limited to,
nonpayment by the organization of amounts due the provider under this
contract, insolvency of the organization or any breach of this contract by
the organization, shall the provider or its assignees or subcontractors
have a right to seek any type of payment from, bill, charge, collect a
deposit from or have any recourse against the enrollee, persons acting on
the enrollee's behalf (other than the organization), the employer or group
contractholder for services provided pursuant to this contract except for
the payment of applicable copayments for services covered by the
organization or fees for services not covered by the organization. The
requirements of this clause shall survive any termination of this contract
for services rendered prior to such termination, regardless of the cause of
such termination. The organization's enrollees shall be third party
beneficiaries of this clause. This clause supersedes any oral or written
agreement now existing or hereafter entered into between the provider and
the enrollee or persons acting on the enrollee's behalf (other than the
organization).". To the extent that any provider or subcontractor's
contract, fails to incorporate such provisions, such provisions shall be
deemed incorporated into such contracts by operation of law.
(b) All provider and subcontractor contracts must contain provisions
whereby the provider or subcontractor shall provide, arrange for or
participate in the quality assessment programs mandated by this Act, unless
the Department of Insurance certifies that such programs will
be fully implemented without any participation or action from such
contracting provider.
(c) The Director may promulgate rules requiring that provider contracts
contain provisions concerning reasonable notices to be given between the
parties and for the organization to provide reasonable notice to its
enrollees and to the Director. Notice shall be given for such events as,
but not limited to, termination of insurance protection, quality assessment
or availability of medical area.
(Source: P.A. 86-600; 86-1408.)
(215 ILCS 130/2009) (from Ch. 73, par. 1502-9)
Sec. 2009.
Subordinated indebtedness.
An organization having a
certificate of authority under this Act may borrow or assume a liability
for the repayment of a sum of money upon a written agreement that the loan
or advance with interest thereon not exceeding a reasonable rate shall be
repaid only out of net worth of the organization in excess of such minimum
net worth as is stipulated in and by the agreement. The agreement shall
first be submitted to and approved by the appropriate authoritative body of
the organization and the Director. Repayment of principal or payment of
interest may be made only with the approval of the Director when he is
satisfied that the financial condition of the organization warrants such
action, but such approval may not be withheld if the organization shall
have and submit satisfactory evidence of net worth of not less than the
amount stipulated in the repayment of principal or interest payment clause
of the agreement. No loan or advance made under this Section or interest
accruing thereon shall form a part of the legal liabilities of the
organization until authorized for payment by the Director, but until such
authorization all statements published by the organization or filed with
the Director shall show the amount thereof then remaining unpaid as a
special surplus account. Nothing in this Section shall be construed to
mean that an organization may not otherwise borrow money, but the amount so
borrowed with accrued interest thereon shall be carried by the company as
a liability.
(Source: P.A. 86-600.)